A living wage for the dead? Costly flaws plague U.S. system

WASHINGTON — The U.S. government has a problem with dead people. For one thing, it pays them way too much money.

In the past few years, Social Security paid $133 million to beneficiaries who were deceased. The federal employee retirement system paid more than $400 million to retirees who had passed away. And an aid program spent $3.9 million in federal money to pay heating and air-conditioning bills for more than 11,000 of the dead.

These mistakes are part of a surprising glitch at the heart of the federal bureaucracy. Because of a jury-rigged and outdated system meant to track deaths, the government has trouble determining exactly which Americans are deceased.

As a result, Washington is bedeviled by both the living dead and the dead living.

The first group are people who have died but are counted as alive in federal records. Their benefits keep coming. Millions of dollars pile up in unwatched accounts. Millions more are spent by feckless relatives. In one recent record-breaking case, a son stole his dead father’s federal benefits for 26 years.

The second group includes living Americans – at least 750 new people every month – whom the system falsely lists as dead. And once you’re on that list, it is not easy to get off. This summer in Utah, one man visited a Social Security office to protest his “death” in person. But the clerks wanted more evidence. They gave him a piece of paper, the man’s son recalled.

They asked him to write on it, “I’m alive.”

In Washington, these failures have become a long-running case study in how government systems break – and stay broken.

In this case, the causes include familiar bad habits, such as the inattention of Congress, and inertia in the bureaucracy. A job that the government needs done – compiling a full and accurate list of the nation’s dead – never really became anybody’s job.

“We come into the world with nothing. And we leave this world with nothing,” said Sen. Tom Carper, D-Del. Or at least, he said, that’s how it’s supposed to work. Now, Carper said, “as long as we have dead people getting benefits, there’s still a Hail Mary [chance] at trying to take it with you. And if you can’t take it with you, someone else is getting that money.”

COSTLY GLITCHES

The task of tracking deaths for the federal bureaucracy is an enormous one; about 2.5 million Americans die each year. Federal officials say the vast majority of these cases are handled correctly: The death is recorded. Government money is no longer sent to that person.

But not always. In fact, glitches in the system have paid more than $700 million to the dead, according to government audits performed since 2008.

The latest mistakes were revealed last week. In 2011 alone, auditors found, Medicare paid $23 million for services “provided” to dead people. From 2009 to 2011, it spent $8.2 million on medical equipment “prescribed” by doctors who had been dead for at least a year. The causes seemed to include poor record-keeping, sometimes exploited by fraudsters.

For government watchdogs, these are some of the most fixable – and therefore the most maddening – mistakes that the government makes. A big part of the frustration stems from the fact that there is no interest group fighting to keep the flawed status quo: The dead do not lobby.

But, somehow, they still get paid.

“Not to speak ill of the dead, but they’re the least deserving of federal payments,” said Steve Ellis of the group Taxpayers for Common Sense. This is real money: Payments to the dead in recent years have totaled more than the annual budget of the Library of Congress. But the situation doesn’t get fixed, Ellis said, because the cost is spread among all taxpayers – too wide and too thin to make anybody very mad.

“In the end, it’s not enough money. And it’s not enough of an issue to get people rallied around,” he said.

The trouble with dead people often begins with something called the Death Master File, which is kept by the Social Security Administration. Every day new reports are added, provided by relatives, funeral homes and the state agencies that issue official death certificates.

The list contains 90 million reports.

The problem is that not all of them are correct.

This is the flaw at the center of the system. A task that requires near-perfection – maintaining the death records used by agencies across Washington – has fallen, by default, to an agency that does not believe perfection is its job.

Instead, Social Security officials say, they maintain the list for their own narrower purpose – to stop dead people from receiving Social Security benefits. If a death is reported and the person wasn’t getting Social Security payments (because, for example, he or she was too young), the agency doesn’t verify that the report is correct.

But it does put the report into the master file, which is shared with other agencies.

Every month, according to the Social Security Administration, at least 750 living Americans are wrongly put into the Death Master File. The process of getting off the list is known as “resurrection” or “un-deading,” in the slang of agency workers.

“Nobody told me to do this. I just thought about it: I should just take my dad into the Social Security office here in Provo. Just show him in the flesh, just to show . . . he’s alive,” said David Cleveland of Santaquin, Utah.

This past summer, Cleveland’s mother died. For some reason, the federal government got the message that his father, Leonard Cleveland, 78, was dead instead.

“You need to write on this piece of paper that ‘I’m alive,’ “ he recalled the clerks in Provo saying. His father did, and signed it. They went home.

But that didn’t fix it. So they went back to Provo.

“This time, he had to write another sentence . . . ‘I’m alive, I showed my driver’s license,’ “ David Cleveland said. That didn’t work, either. It took the intervention of Rep. Jason Chaffetz, R-Utah, to get the records fixed.

IMPROVING THE SYSTEM

In other places around Washington, there are similar glitches that make the dead look alive. At several agencies, officials aren’t even allowed to look at the complete Death Master File. Because of rules limiting how widely death data from states can be shared, the Social Security Administration limits the full list to a handful of large benefit-paying agencies.

Other agencies get a shorter list, which can leave out up to 40 percent of the death reports.

“Apparently we’ve been getting the less-full one since we started this, back in late 2006,” said Jim Baxa, an official at the Agriculture Department who oversees farm subsidy payments. His agency was trying to stop dead farmers from being paid, but officials learned that the list they got was incomplete.

“Most people on the outside think, ‘Well, that’d be real easy, just to get two government agencies to compare notes,’ “ he said. “Well, it’s not.”

Now, after years of inattention, President Barack Obama and two senators have laid out ideas to improve the system. In his 2014 budget, Obama requested $22 million to improve the death reports that come in from states by upgrading their systems to transmit faster and more accurate data.

In the Senate, Carper and Sen. Tom Coburn, R-Okla., have written a bill that would require all federal agencies to check the Death Master File before paying benefits. It would also give all agencies access to the full file, not just the partial one. And it would require new efforts to make sure the data in the file are accurate.

In the meantime, the dead continue to be paid. On Tuesday in Baltimore, 63-year-old Dwight Newman will be sentenced by a federal judge after pleading guilty to stealing his deceased father’s Social Security benefits.

As these cases go, his late relative did not “live” that long. Newman’s father died in 2007. But four years had passed, and $79,105 had been paid, before official Washington seemed to realize it.

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